How is the NHS organised and funded today?
The NHS is headed by parliament and the secretary of state for health (currently Alan Johnson). Under him, there are ten Strategic Health Authorities which oversee Primary Care Trusts (PCTs) and other trusts which cover areas such as mental health, learning disability and the ambulance service.

In 2004, the Government set up a separate system of Foundation Trusts. There are now 92 of these – all regulated by Monitor, an independent regulator. Foundation Trusts are freer from central control and manage their own budgets. It’s government policy to encourage all trusts to attain Foundation status.

The NHS is funded primarily out of central taxation. Its total cost in 2005-6 was £76 billion.

What was British health care like before the NHS?
The organisation of health care in Britain before 1948 – and access to it – had significant drawbacks. In 1911, the chancellor, Lloyd George, established a system of National Health Insurance. This offered benefits to the contributor below a certain level of income, and did not include dependants. Contributions were not graduated according to income but were paid at a flat rate – approximately half by the employee and half by the employer.

In return for their contributions, individuals received cash benefits for sickness, accident and disability. These were paid at a fixed rate, regardless of severity – and were distributed through insurance companies. Contributors also had the right to free but limited care from a doctor on a local list or panel –yet were only entitled to hospital treatment when suffering from tuberculosis. As for doctors, they received a ‘capitation fee’ – a standard payment for each panel patient.

Lloyd George’s insurance service may have been Britain’s largest pre-1948 health care system, yet it wasn’t alone in providing medical assistance. The Poor Law offered relief to the most impoverished Britons, and workhouses provided their own infirmaries.

The public health system in local government also provided a wide range of services, such as support for school meals and health education. By the 1930s, it had expanded its hospital provision, taking on Poor Law hospitals.

The other major hospital system offering care to patients before the advent of the NHS was that of the voluntary hospitals. The majority of these were initially supported by donations from subscribers who had the right to sponsor patients for admission. Yet, by the 1930s, they found themselves in the midst of a financial crisis.

In short, Britain’s health care system, pre-1948, did not work well. It was a patchwork of institutions which were not accessible according to need. The two primary deficiencies were lack of access to hospital care and lack of access to health care for dependants – the families of working men. Many of these had no formal health cover and had to use self-medication or medicines bought over the counter from the local pharmacist. As a result, an illness, or paying for medical attendance at a birth, could cause major financial problems for families across the country.

How did the NHS differ from what had preceded it?
The National Health Service, which came into existence on the ‘appointed day’, (5 July 1948), was the first health system to offer free medical care to the entire population at the point of need. The service was paid for out of taxation, and was not based on the insurance principle, with entitlement following contributions.

Before and during the war it was thought that the public health service in local government would provide the eventual basis for a national system. However, hospitals were nationalised and, significantly, the role of local government was limited. The new service was totally free until 1951, when charges were imposed for prescriptions, dental care and spectacles.

What’s wrong with the structure of the NHS?
The chief problem with the structure of the NHS was that, from the outset, it was a compromise set in place to secure the support of the medical profession.

The Labour government that founded it wanted to establish a locally administered entity but was confronted by a profession that was hostile to a salaried service within local government. The minister of health, Aneurin Bevan, was well aware that the NHS simply couldn’t survive without the support of the doctors, and so secured their backing by nationalising the hospitals.

The upshot is a service that has been consistently criticised for its ‘democratic deficit’ – the loss of local democracy that resulted from it being taken out of the control of local councillors.

The NHS has also attracted criticism for its lack of integration. When established, it was divided into three individual parts: hospitals, local government services and general practice – each of which tended to operate separately from one another.

What does history teach us?
The model of the NHS, centrally funded out of taxation and thus politically directed, was quite different from that of other health systems reorganised after the war. Universal access was a tremendous step forward – in particular for women. The removal of fear of illness cannot be underestimated and, as a result, the NHS was popular at its inception and its ideal has remained so. Indeed, politicians have not interfered with these founding ideals, despite a flirtation with insurance in the 1980s.

NHS tax funding has meant that health matters are far more sensitive in the UK than in insurance-based countries. Politicians have tried to find solutions to the problems of health care delivery in relentless reorganisations of the service or in the establishment of central targets – one recent example being general practice appointment booking.

Despite the NHS’s early acquired reputation for financial profligacy, it was in fact a cost-effective service. The initial financial estimates for the service assumed that it would be funded out of local and not national taxation and so had underestimated its true cost. In recent years politicians have increased the proportion of funding given to the NHS.
Instead, it’s the NHS’s structure that has led to its continuing problems. The pre‑NHS service may have been fragmented but the NHS tripartite service (hospitals, local government services and general practice) also left much to be desired.

Recently the ‘polyclinic’ has been advanced by government adviser Ara Darzi as a new solution to the problem of bringing together specialists, other services and general practitioners. But this is not a new idea. Indeed, health centres were intended to be the unifying force in the NHS in 1948 – though few were built.

The original NHS was a doctor-dominated service, and negotiations between GPs and the government continue to take centre stage, as seen in the recent rise in GP pay and the conflict over surgery opening hours.

Despite the NHS’s success, private medicine retains a role, now taking a new form in the shape of health care companies, who provide primary care or the private funding of hospital building. The NHS of 1948 was dominated every bit as much by hospitals as it was by doctors. This dominance has continued and is represented currently through the prominence given to foundation hospitals, which seem rather like the old voluntary hospitals reborn.

The pre-eminence of hospitals had one immediate consequence for the NHS: it became preoccupied with curing sickness rather than promoting good health. As a result, public health services were downgraded in value, and have struggled to find a role within the health system ever since, losing their position in local government altogether in the 1970s.

However, in the wake of the Wanless Report of 2004, strenuous moves have been made to reorientate the service towards what is now called Primary Health Care (PHC) – and the government has adopted a more holistic approach, enabling a wider range of practitioners to deliver health care. This places GPs, dentists and midwives at the heart of the service. As such, community pharmacists can now be seen as building on the practice of ‘counter prescribing’.

The ‘democratic deficit’ within the service has continued to elude resolution. Patient and public participation in the structure of the NHS has traditionally been limited and so, with patient choice firmly back on the agenda, the Government is reassessing patient input once more.

Since the advent of Primary Care Trusts – which cover similar areas to local councils – the connection between the NHS and local democracy has become more obvious. Yet, there is still no direct local electoral input into the health service. This issue has dogged the NHS since its inception 60 years ago – and is likely to do so for some time yet.

Three lessons from history
1. The NHS ideal of universal access at the point of need was unique and has retained its popularity. Politicians are likely to remain ultimately responsible through government tax funding.

2. Delivery of the ideal continues to present problems. The structures put in place in 1948 were flawed, giving doctors too great an influence, a focus on sickness rather than positive health, and a lack of democratic input.

3. Such structural problems, or attempts to deal with them, are often presented as new initiatives, when they have a history. How ‘polyclinics’ or local democracy operated in the past could inform today’s policy discussions.

Professor Virginia Berridge directs the Centre for History in Public Health at the London School of Hygiene and Tropical Medicine. She is the author of Marketing Health. Smoking and the Discourse of Public Health in Britain, 1945–2000 (OUP, 2007)

We use cookies to improve your experience of our website. Cookies perform functions like recognising you each time you visit and delivering advertising messages that are relevant to you. Read more here